Ghabbour Group ERP Deployment: Learning from Past Technology Failures

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Chapter 12 Ghabbour Group ERP Deployment: Learning From Past Technology Failures

M. S. Akabawi American University in Cairo (AUC), Egypt

EXECUTIVE SUMMARY Ghabbour group “GB Auto,” an Egyptian auto trading and manufacturing establishment, has gone through two ERP successive implementations within the past 12 years. The newer implementation has experienced several impediments. The executives and the Board of Directors at the group have thoroughly and aggressively examined the status of the IS services provided by this ERP system and assessed their impact on the quality of decision making at all levels of management. The driver for this was to secure all the necessary platforms and management tools for enabling growth and improving efficiency and effectiveness of the company’s business operation and resources. The extent of lack of control and effective utilization of the use of resources in the group has been cited by the top management in many interviews. Following its public offering and registration in the CASE and CMA, GB Auto was legally demanded to provide annual and quarterly audit reports of its varied LOBs’ performance. The existing information management infrastructure was not providing such agile services. The trajectory of implementations of integrated Enterprise Information Systems at the group was reviewed in this case study and was duly investigated to assess the effectiveness and appropriateness in servicing those purposes and increasing the company’s competitive advantage.

DOI: 10.4018/978-1-60960-583-4.ch012

ORGANIZATION BACKGROUND With the transfer of management to the younger Ghabbour generations in the early 1990’s, the GB Ghabbour Group (GB) name has become closely group witnessed phenomenal growth and expan- linked to the automotive industry in the Egyptian sion. Horizontal expansion was manifested by market – from distribution and manufacturing to the addition of new lines of business (LOB) and after sale services – spanning the full spectrum diversification of product mixes. While verti- of the transportation arena. This led the group to cal expansion was manifested by increasing the adopt the motto “GB Auto - everything on wheels.” manufacturing base capacities, trade partners and By the 1990’s, privately owned GB group became brand names licensing. Hyundai car manufacturer widely associated with Hyundai passenger cars of Korea granted GB group the exclusive agency as a distributor and car assembly manufacturing. for the distribution of its passenger cars in Egypt The group’s role and history in the Egyptian since 1992. economic field dates back to the 1940’s. Dur- In 1995, GB group was also granted by Hyun- ing this era, the two brothers, Kamal and Sadek dai the technical license to assemble passenger Ghabbour established their private auto trading cars - Completely Knocked-Down (CKD) units in company. The firm was officially incorporated addition to trading in the Completely Built Units in 1956 as “Ghabbour Brothers.” The business (CBU). Since then, GB group acquired additional area of the firm included trading in automotive agencies for Mazda passenger cars, two and three products, construction materials, home appliances wheelers products of Bajaj of India; assembly li- and electronics. censes for Mitsubishi trucks and buses; and Volvo During the 1960’s, the Ghabbours’ legacy trucks and buses. In 2006, GB group entered the was firmly maintained despite the economic transportation services area, for both passengers constraints and hardships in this period, when and cargo, by establishing the new subsidiary - Egypt embraced the Socialist economic doctrine. Haram Company. By the early 1970’s and as a result of the Egyptian In 2003, Chairman of the GB Group, Dr. Raouf government’s initiative to adopt the economic Ghabbour, established the Raouf Ghabbour Invest- open door policy, the group’s vision to become ment Company (RGI) as the holding company of serious establishment in the automotive industry the group’s subsidiaries operating in varied LOB not only as a trader, but as a manufacturer, took portfolio. A list of these subsidiaries is shown shape. To that effect, the company started focusing in Table 1 together with the business activities on acquiring licenses and agencies for passenger pertaining to each subsidiary. In Table 2, we list cars, buses, trucks and automotive parts. the various corporate business organizational The first manufacturing operation of the group units in the group and the associated business started in 1985 by assembling bus bodies under activities each performs. Those corporate business technical agreement with Scania AB. During this units provide services across the entire functional era, Egypt’s sole automotive manufacturer was activities of the group’s subsidiaries. the state-owned El Nasr company for automotive Before year 2006, RGI (S.A.E) operated as which failed to establish the robust infrastructure the holding company for GB group’s affiliated for sustainable automotive manufacturing base companies which were wholly owned by RGI. [removed phrase]. The initial industrial base of GB However, one of the groups’ affiliated companies group started near Cairo-Alexandria Agricultural – GB Capital was subsequently named as the Road in Qalyubia governorate, which was quite a holding company for the group and RGI became convenient site due its proximity to major markets in effect a wholly owned subsidiary. In April 2007, and easy access. GB capital name was changed to GB Auto.

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